WTO: 2009 PRESS RELEASES

PRESS/591

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Banana trade figures

  

“I welcome the news that a comprehensive agreement on bananas has now been reached. This has been one of the most technically complex, politically sensitive and commercially meaningful legal disputes ever brought to the WTO. It has also been one of the longest running “sagas” in the history of the post-WWII multilateral trading system,” he said.

“After lengthy consultations, legal examinations, negotiations, and gentle prodding by an “honest broker”, a solution has been found. This proves there is no trade issue which lies beyond the reach of WTO members when they exhibit good will and a spirit of compromise. I hope that the same pragmatism, creativity and diplomacy will help move forward the Doha Round negotiations.”

 

Chronology of the banana disputes in GATT/WTO

Introduction

The banana issue is one of the longest running disputes in the post-WWII multilateral trading system. It has generated considerable debate and litigation among the widest range of the entire WTO membership. And it has resulted in multiple legal rulings by dispute panels, the Appellate Body and special arbitrators. All this attention has focussed on the treatment the EU gives to the import of bananas from the African, Caribbean and Pacific (ACP) countries in preference to bananas from Latin America. Today, the final, comprehensive agreement has been announced by the EU.

In the GATT

In July 1991, Costa Rica expressed concern in the GATT Council meeting that an impending EU banana import regime would discriminate against Central American countries. It urged agreement in the Uruguay Round for free trade in bananas. Colombia, Honduras, Peru, Venezuela and Mexico shared this concern.

In June 1992, Colombia, Costa Rica, Guatemala, Nicaragua and Venezuela requested consultations with the EU. In September 1992, they announced that the consultations had failed and requested the GATT Director-General to use his good offices.

In December 1992, these five Latin American countries accepted the DG's suggestion that, in order to make progress, the formal good offices be suspended until January 1993 and to leave the door open for informal negotiations that would make it possible to find a solution within the Uruguay Round commitments.

In February 1993, the five complainants stated at the GATT Council that the good offices exercise had failed as a result of the decision by the EU Council of Ministers on 17 December 1992 to establish a common banana regime that would enter into force in July 1993. According to the five Latin American countries, the new regime would violate the 20 per cent maximum tariff binding on bananas granted by the EU in the 1961 Dillon Round, as well as various other GATT provisions.

At the request of the five countries, a panel was established which ruled in June 1993 that the banana import restrictions applied by several EU member states violated GATT Article XI (quantitative restrictions) and that the tariff preference granted by the EU to bananas from African, Caribbean and Pacific (ACP) countries violated the MFN principle and could not be justified under GATT Article XXIV (FTAs & customs unions).

Until 1 July 1993, each EU member state maintained its own banana import regime, with some member states having special arrangements favouring their former colonies. On 1 July 1993, a new EU-wide banana import regime came into effect. The same five Latin American countries requested a new panel to examine the new unified banana import regime.

On 11 February 1994, the second panel also ruled against the new banana import regime.
  

In the WTO

In February 1996, dissatisfied with the EU's implementation of the GATT panel reports, Ecuador, Guatemala, Honduras, Mexico and the US filed a new complaint, under the WTO's dispute settlement system, against the EU’s banana import regime, which had been in force since July 1993, claiming that it unfairly restricted the entry of their bananas to the EU.

In September 1997, the WTO ruled that the EU’s banana import regime was inconsistent with WTO rules for the following reasons:

a) the EU’s tariff quota allocation, particularly to the ACP (African, Caribbean, Pacific) countries, was contrary to the rule of non-discriminatory administration of quotas (Article 13 of the GATT - General Agreement on Tariffs & Trade);
b) the EU’s licensing procedures, which involve the purchase of EU and/or ACP bananas in order to obtain rights to import some Latin American (or other third countries’) bananas, were contrary to the MFN (most-favoured-nation) rule and the national treatment rule (Articles 1 & 3 respectively of the GATT); and
c) through the impact of this licensing system on the service suppliers of the complaining countries, the licensing procedures were also contrary to the MFN rule and the national treatment rule (Articles 2 & 17) of the GATS — General Agreement on Trade in Services.

In January 1999, the EU introduced a new banana import regime but in April 1999 the WTO ruled that this new regime was also incompatible with the EU’s WTO obligations.

On 19 April 1999, the WTO granted US authorization to impose sanctions upto an amount of US$191.4 million per year on EU products entering the US market.

In May 2000, the WTO granted Ecuador authorization to impose sanctions upto an amount of US$201.6 million per year on EU exports to Ecuador.

In April 2001, the three countries reached an agreement whereby Ecuador and the US would suspend their sanctions so long as the EU changed its banana import regime from the existing tariff-rate quota system to a tariff-only system by 1 January 2006. Under this new tariff-only system, banana imports would not be subject to quotas; there would be a single tariff for all banana imports, except for ACP bananas which would continue to benefit from a preferential tariff arrangement but not from country-specific tariff quota shares.

In order to change from a tariff-rate quota system to a tariff-only system, the EU has to modify all its existing WTO market-access commitments relating to bananas. Hence, under WTO rules (Article 28 of GATT), the EU has to re-negotiate with all countries which supply bananas on a non-preferential basis to the EU and reach agreement on the details of the new tariff-only system. At the end of these negotiations, the share of the EU market for these suppliers should be no less than before.

In November 2001, at the WTO Ministerial Conference in Doha, Qatar, all member governments of the WTO adopted a Ministerial Decision which formalized the above elements of the agreement between Ecuador, the US and the EU. The Ministerial Decision also spelt out the procedures and timetable for possible arbitration in the event the EU is unable to reach an agreement with the banana-supplying countries on the new tariff-only system. A related Ministerial Decision adopted at Doha allows ACP bananas to be imported into the EU tariff-free until 31 December 2007.

On 31 January 2005, after several months of consultations with non-preferential banana-supplying countries, the EU informed the WTO of its new banana tariff: Euro 230/tonne.

In March/April 2005, Brazil, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Nicaragua, Panama, and Venezuela requested arbitration under Doha Ministerial Decision.

In August 2005, the arbitration panel ruled that EU’s proposed Euro 230/tonne tariff would not maintain existing market-access for non-preferential banana suppliers in Latin America.

On 12 September 2005, the EU proposed a revised tariff of Euros 187/tonne. Further consultations were held among the parties but they were unable to reach a mutually-satisfactory solution.

On 26 September 2005, the EU requested a second arbitration, saying that, with the exception of a proposal for a zero tariff, the EU had not been presented with an alternative figure to its proposed tariff, and that there was no basis for seeking a mutually-satisfactory solution in the absence of a counter proposal from the other parties. Hence, the EU was requesting an arbitration to determine, within 30 days, whether the new EU proposal “has rectified the matter”.

On 27 October 2005, the second arbitration report was issued. It determined that the EU's proposed rectification, consisting of a new MFN tariff of Euro 187/tonne and a 775,000 ton tariff quota on imports of bananas of ACP origin, would not result in “at least maintaining total market access for MFN banana suppliers”. The arbitrator, therefore, concluded that the EU had failed to rectify the matter.

On 29 November 2005, the EU adopted new banana import measures which would come into effect on 1 January 2006. A new tariff for MFN bananas was set at Euros 176/tonne with a zero tariff for ACP bananas up to a level of 775,000 tons.

On 30 November 2005, Honduras, Panama and Nicaragua separately requested consultations with the EU under DSU Article 21.5.

In December 2005 at the Hong Kong Ministerial, several Latin American countries expressed serious concern over what they considered to be the EU's non-implementation of the WTO’s rulings in the long-standing banana dispute, particularly in the light of the two arbitrations under the Doha Waiver. WTO DG Lamy, therefore, nominated Mr Jonas Store, the Norwegian Trade Minister, as “Facilitator” to try to find a solution and asked him to report to the General Council accordingly. Minister Store conducted regular meetings under a “good offices” process for more than 18 months.

On 28 November 2006, Ecuador requested consultations with the EU under DSU Art 21.5, and a panel was established on 20 March 2007. Panel composed on 15 June 2007. On 10 December 2007, report issued to parties, and published on 7 April 2008. The panel ruled that the duty-free tariff quota for bananas originating in ACP countries and the MFN tariff of Euros 176/tonne were in violation of Art 1, 2, &13 of GATT. Time period for adoption was extended to 29 August 2008.

Colombia and Panama filed new disputes respectively on 21 March 2007 & 22 June 2007.

On 12 July 2007, the DSB established Art 21.5 panel at request of US. Panel composed on 13 August 2007. Report issued to parties on 29 February 2008, and published on 19 May 2008. The panel ruled that the duty-free tariff quota for bananas of ACP origin was in violation of Art 1 & 13 of GATT. Time period for adoption was extended to 29 August 2008.

On 28 August 2008, the EU appealed both reports. Both Appellate Body reports published on 26 November 2008, upholding the panels' findings.

On 11 December 2008, the DSB adopted the reports dealing with Ecuador's complaint.

On 22 December 2008, the DSB adopted the reports dealing with the US' complaint.

Since then, the EU has regularly reported to the DSB that it is engaged in discussions with Latin American banana-supplying countries to conclude a comprehensive agreement that would include the level of the new EU bound tariff duty.

Concurrently since November 2007, at the request of some of the parties, the WTO Director-General Pascal Lamy has been using his good offices to help broker an agreement.

DG Lamy's Good Offices under DSU Art 3.12

On 2 November 2007, Colombia referred the matter to the Director-General, acting in an ex-officio capacity, to use his good offices to help facilitate a solution under Article 3.12 of the DSU. Panama similarly requested the DG's good offices on 1 February 2008.

Both processes agreed to adhere to confidentiality of content of proceedings with the aim of seeking a comprehensive solution that covered all outstanding banana issues in the WTO, including the six disputes filed under the DSU (DS16, DS27, DS105, DS158, DS361 & DS364), the two arbitrations under the Doha Waiver (WT/L/616 & WT/L/625), the EU enlargement/compensation negotiations under Artciles XXIV and XXVIII of GATT 1994, and the issue of non-recognition of negotiating rights raised at the Hong Kong Ministerial and discussed subsequently in the General Council (WT/MIN(05)/9, WT/GC/85, WT/GC/90 & Corr.1, and WT/GC/100).

During the period November 2007 — July 2008, the DG conducted several meetings under the Colombia/EU and the Panama/EU “good offices” processes. In addition, he had a number of meetings with other interested WTO members including other MFN suppliers, ACP banana producers, other banana producers and importers.

During the last ten days of July 2008, several Ministers attended a meeting of the TNC in Geneva to participate in the Doha Round negotiations to reach an agreement on the modalities in agriculture and industrial products. As part of these larger Doha Round negotiations, consultations continued among the parties to seek a comprehensive solution of the banana issues. The TNC was unable to reach an agreement on the Doha Round modalities for agriculture and industrial products. No deal was reached on bananas either.

Parties continued to work in search of a solution, until the announcement of a comprehensive agreement on Tuesday 15 December 2009.

  • WT/L/784 Geneva Agreement on Trade in Bananas

 

Banana trade figures

I. Developing economies1  exporters of bananas, 2005-2008

(Million dollars and percentage)

 

 

 

 

 

Share in world

Annual percentage change

 

2005

2006

2007

2008

2005

2008

2007

2008

 

 

 

 

 

 

 

 

 

World 2

6317

6607

7483

8812

100

100

13

18

Ecuador

1085

1214

1303

1639

17

19

7

26

Costa Rica

490

648

702

712

8

8

8

1

Colombia

506

511

558

644

8

7

9

15

Philippines

363

404

397

398

6

5

-2

0

Guatemala

262

233

325

344

4

4

39

6

Honduras

136

132

154

171

2

2

17

11

Cote d'Ivoire

94

116

127

118

1

1

9

-7

Panama

96

106

110

97

2

1

4

-12

Brazil

33

39

44

36

1

0

15

-20

Mexico

24

31

20

48

0

1

-33

137

Peru

18

27

31

46

0

1

16

45

Above Countries

3107

3459

3772

4252

49

48

9

13

Note: Bananas are defined as HS 0803: Bananas, Including Plantains, Fresh Or Dried.
Based on available data, imports are better estimates for world trade in bananas as they include mirror data for non-reporting countries.
World estimate exclude intra-EU27 trade. World imports are valued CIF (include cost, insurance and freight) while exports are valued, FOB (free on board), thus as the data are not adjusted for cif/fob factors, share of exporting countries are under-estimated.
1 Countries for which data are readily available
2 World imports: Based on sum of all importing countries for which data are readily available ( exclude intra-EU (27) trade)
Source: UN Comtrade and Global Trade Atlas (GTA)

 

II. World imports of bananas, 2005-2008

(Million dollars and percentage)

 

 

 

 

 

Share in world

Annual percentage change

 

2005

2006

2007

2008

2005

2008

2007

2008

 

 

 

 

 

 

 

 

 

World 1

6317

6607

7483

8812

100

100

13

18

EU27 Extra

3109

3217

3770

4338

49

49

17

15

United States

1134

1201

1225

1373

18

16

2

12

Japan

591

565

582

830

9

9

3

43

Russia

449

482

587

671

7

8

22

14

Canada

203

223

237

312

3

4

6

32

Above countries

5486

5688

6400

7525

87

86

13

18

 

Memorandum items:

 

 

 

 

 

 

 

 

World imports from ACP

644

716

738

880

10

10

3

19

World imports from Latin America

5102

5315

6114

7060

81

80

15

15

EU27 extra+intra imports

5022

5007

5852

6886

 

 

 

 

EU27 intra trade

1913

1789

2082

2547

 

 

 

 

1 World imports: Based on sum of all importing countries for which data are readily available ( exclude intra-EU (27) trade)
Source:
Global Trade Atlas (GTA) and UN Comtrade, 15.12.2009

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